US DOLLAR INDEX - 'Double bottom brightens the outlook'

by Mike Ellis
6/13/2006, Forexnews.com

Analysis

The Dollar Index made two lunges down into the 83's over the past month and neither one quite met the full 83.10 projection from the large head and shoulders formed over much of the past year. However, in the aftermath of warding off these two dips, the Dollar has staged a more aggressive comeback to break loose over the 85.50 resistance, thereby developing a modest double bottom. While the size of the latest base is nothing to compare against that prior top structure, the speed of the decline out of the 89's formed little in the way of resistance en route and so there appears to be a fairly clear road back up to 87.80. So the greenback may well have rounded the corner here because, even though it is likely to be denied in that 87.80 vicinity on the first couple of approaches, resulting setbacks would probably be contained in the 85's to develop an overall upward stepping process, the culmination of which could later be the conquest of 87.80. Therefore, barring being slapped back below 85.00, the technical scene has evolved positively for the US currency and strategy could accordingly become more aggressive.